KUCHING, Sept 9: Bank Negara Malaysia’s (BNM) decision to increase the overnight policy rate (OPR) by 25 basis points to 2.5 per cent is not only helpless in curbing inflation but will burden general borrowers of bank loans.
This is the view of Sarawak Democratic Action Party (DAP) chairman Chong Chieng Jen who said that most households in Malaysia have bank loans, and thus the OPR increase means a heavier financial burden.
“This is the third time BNM has increased its interest rate this year, from 1.75 per cent at the beginning of this year to 2.5 per cent. This 0.75 per cent interest rate increase will hurt those with housing and other bank loans.
“As an illustration, for any person with a housing loan of RM300,000, a 0.75 per cent increase in interest rate means an increase of RM2,250.
“In other words, borrowers will have to pay an additional RM187.50 per month because of the interest rate increase by the government this year alone,” he said in a statement today.
Chong, who is also Padungan assemblyman and Stampin MP, explained that the increase in prices of raw materials, freight charges, fertilizers, animal feed, food prices, and ringgit depreciation is the main contributor to inflation in Malaysia.
He added that increasing interest rates would not help bring down commodity prices but would slow down the economy while hurting businesses and general house purchasers.
Quoting BNM’s latest report, Chong said Malaysia’s household debt-to-Gross Domestic Product (GDP) ratio as of December 2021 was 89 per cent, which is exceptionally high compared to neighbouring countries.
“In layman’s terms, most households in Malaysia have bank loans, and thus the increase in OPR means that all these families will have to pay more in their monthly instalments.
“Therefore, I call on BNM to reconsider its decision to increase the OPR,” said Chong. — DayakDaily